I was just hoping you could give a little more color on your valuation for ROIC. I find the idea very interesting, but your valuation at ~2.0x book value seems a bit aggressive. You cited that figure as an average across the REIT universe - does that average clean book value figures, for instance by taking out accumulated depreciation or adjusting property values?

Essentially, Tanz and team have accumulated the vast majority of their portfolio over the past year. Historically, REITs have traded near NAV (https://www.greenstreetadvisors.com/pdf/sample_research/Nort...). Now let's assume Tanz bought in at fair value (i.e. what everyone else got on the street); then the FV price on the shares should be book value adjusted for accumulated depreciation. Now let's consider that (a) Tanz got them for below fair value and (b) he will earn great returns on retained earnings. I agree with your jockey argument and these likely have truth to them, but the margin of improvement doesn't seem large enough to justify a jump from 1.0x to 2.0x to book.

I also thought of it this way - if I bought in at book value, it would be like contributing money to a private real estate fund ran by Tanz and team. Since they are still putting cash to work and the assets on the book were all purchased within the past year, book value is an accurate gauge of his cost. Perhaps the properties have appreciated a bit, but probably not too much. Now if Tanz is as good as you say he is and the opportunity is good, then investing in a fund with him would make sense. Our "margin of safety" is built in by getting his talent at book value, i.e. his ability to earn returns above our cost of capital. But I don't think I would buy into such a fund at a 100% premium. That doesn't seem justifiable.

Based on the current share price I think shareholders do okay or good. But I don't know if 2.0x is appropriate and I don't know if the current share price, 15-20% above book, gives a large enough margin of safety. Btw, I think your original article ran when the shares were at $9.94, right around BV, represented a good entry choice. But you guys say to still buy below $12, which seems a bit rich to me.